Martedì, 16 Ottobre 2018

Bond spreads plunge, Italian bonds sell out and markets rise


(ANSA) - Milan, October 17 - Bond interest rates and spreads
plunged to new lows on Wednesday, while the Italian treasury saw
record orders flood in for its bond issue Thursday.
Italy's third bond placement in six months saw 10 billion
euros worth of orders in three days of negotiations.
Wednesday alone saw nearly 5 billion euros worth, or
roughly double the value of orders on each of the previous two
The extraordinary success of the placement was helped by
the fact that plunging spreads on the secondary market made the
Italian treasury's short term bonds more lucrative than the
secondary market equivalent.
Orders from institutional investors helped double the
value of Wednesday's orders whose numbers were roughly on par
with Tuesday - 45,000 versus 41,000, respectively.
The yield on Italian 10-year bonds in the secondary market
dropped to 4.77% on Wednesday, the lowest it has been since June
2011 - well below the 4.90% threshold called "sustainable" by
Italy's treasury director-general of public debt, Maria Cannata
in an interview with Sky TG24 on Tuesday.
The spread between the same bonds and the German benchmark
counterpart sank below April levels to close at 313 points.
Rating agency Moody's decision not to downgrade Spain's
sovereign debt gave a big boost to Spain on Wednesday.
Spanish and German 10-year bonds saw their spread narrow
41basis points to close at 383. The yield on the Spanish paper
was 5.47%.
"The worst - that is, the fear of an eurozone explosion -
has passed," declared French President Francois Hollande told
the newspaper Le Monde. "The best has yet to come. It is waiting
for us to build it," Hollande added.
Meanwhile, European markets rose for the second day in a
Milan's FTSE MIB index rose 1.56% to surpass the 16,000
point threshold to close at 16,233 points.
London's FTSE-100 index rose 0.69%. Paris's CAC 40 index
gained 0.78%. Frankfurt's DAX index climbed 0.29%.

photo: French President Francois Hollande.

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